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Sale of refineries in Petrobras radar

Petrobras board members are warming up to include the refining area in the divestment plan of the company’s assets.

Among the sympathizers of the idea is the president of Petrobras, Pedro Parente, and CFI, Ivan Monteiro. The latter certainly stimulated by the impact the inclusion would have in reducing company debt and in the reduction of costs structure.

As a mere exercise, preliminary simulations made by Petrobras indicate hat the sale of 51% of the Refining Division could represent a revenue of about US $ 42Billion, or something around a third of the company’s total debt, of approximately US $ 120 billion.

But the negotiation of such an idea is considered very touchy theme within the corporation, involving strategic and political issues.

The Petrobras management team Is far from a closed position on he sale of the assets or evenabout the best model for the operation. There are some drafts on the table.

One would involve the transfer of all referenced assets to a new company, which would have its capital offered in the market. Another, more moderate hypothesis, would be the creation of “consortiums”, for the sale of a specific refinery and its logistics, notably the port terminal. In this case, Petrobras could also give up control of a given unit, remaining as a minority shareholder.

There is no doubt that an operation of this caliber would give Petrobras a good financial advantage practically equating the problem of their indebtedness. But there are dramatic decisions to be made.

Counting the pros and cons on the one hand, the company would cease to be a hostage of the government In price formation of refined products, on the other it would lose the status of monopolist. And would have to compete with the “market refineries”, with a known cost structure and agility to automate processes of dismissing people and rationalizing expenditures on items such as operational security.

At the same time, as it reduces its expenses, Petrobras would have to make difficult political and social choices. The economy of entire municipalities revolves around the refineries.The sale of the units would be highly unpopular. Imagine protests in several Brazilian cities, trucks distributors obstructing roads, pilgrimages of mayors to Brasília …